Running a payroll: How times have changed
Since I started working in payroll many years ago, Real Time Information (RTI) and auto enrolment were nowhere to be seen. The tax code was 647L, SMP (Statutory Maternity Pay) was paid at £123.06 per week with SSP (Statutory Sick Pay) paid at £79.15. Back then, you could run a payroll pretty much untrained and still be accurate for a standard salaried or hourly paid member of staff. If you made a mistake there were no issues of having to re-run the payroll, and no FPS to then re-submit to HMRC. All you needed to do was to either give the employee an advance or make a note to reduce their pay the following month. As long as you kept good P35 records throughout the tax year anyone could do it.
Now all has completely changed. Instead of getting a £6,475 personal allowance you can now receive up to £11,005. SMP is now up at £139.58 and SSP is now paid at £88.45. Other changes include that you need payroll software which is compatible with HMRC to both submit the FPS/EPS as well as download any tax code changes etc. You need to be pension savvy to ensure compliance for auto enrolment. Payrolling of benefits are can now be done rather than having to submit a P11D and/or P46 (car). The question now is: how much harder is it to run your own payroll now?
To answer this question we need to look at how easy it was back then. It was definitely looked upon that any intelligent person could run a payroll from start to finish. As long as you could learn the basics, you could easily run the payroll for anything from a 1 person payroll up to a 3,500 person weekly paid payroll if you were given their working hours. If you had a small payroll all you needed to do was ensure the tax, NI and any other statutory deductions/payments were correct and you had nothing else to worry about. There were no regular submissions to HMRC and as long as you paid them on time they were usually happy.
Some might argue that you can still do much the same today, and whilst this is partly true, times have significantly changed. Now, even though I do say so myself, you need to be a highly-trained and skilled payroll professional to work in payroll. With all the new complexities (which only get more complex each tax year – look at payrolling of benefits which has now come to the payroll party) you need to be more highly-skilled and trained than ever. You now need skills in payroll, tax, pensions, benefits and NI to name just a broad range of topics the modern day payroll professional will face.
This is why there is becoming an ever-increasing trend of payroll outsourcing going on. When you used to be able to get someone untrained to run your payroll, companies are now looking at paying a bureau to have their payroll and auto enrolment pension scheme run for them by highly skilled professionals. This way companies can reap the rewards for very little of the cost and are safe in the knowledge that as long as they give the payroll bureau the information they need, their payroll will be accurate, on time and compliant with all HMRC and TPR (The Pensions Regulator) guidelines.
I can see payroll only becoming more and more complex over the next few years. Now we have reached Auto Re-Enrolment as well, the future payroll professional will probably end up sitting just as many exams as an accountant soon. This means for an employer looking to outsource their payroll, now is the time to get your Payroll Bureau because over the next few years I can see a lot of demand with less and less supply available.